Wake up now from a Dutch disease stupor

Our politicians have not grasped the enormity of the huge gas discoveries in the US or the end of the mining boom. They must wake up and the dollar must come down.

It is almost exactly six months since I wrote the benchmark commentary alerting the country that our mining investment boom was coming to an end (A mining boom cut-off is coming, May 21).

A few weeks earlier with Alex Liddington-Cox, I also raised the alert as to the significance of the great US gas discoveries (Global tremors from a US gas explosion, May 4) but at that stage I did not realise how big the discoveries were.

This week Australia’s media is full of commentaries and news explaining how the investment boom in mining ends in 2014 and gas will drag on a couple more years and it then it also ends – thanks to the discovery of another 'Saudi Arabia' in the US (Sheikh Kloppers and BHP's 'new Saudi', November 14).

This morning Alan Kohler is correctly raising an alert to the dramatic changes ahead for the Middle East following the discovery of a new Saudi in the US (America's explosive independence plays, November 19).

But Australia faces changes that will be just as dramatic. You cannot have a new Saudi dumped in the US and not have a period of much lower energy prices. And, as Resources Minister Martin Ferguson explains, Australia has become a high-cost gas and coal production country thanks to government action, unions and, most importantly, bad management.

When you have Canberra dumping carbon and mining taxes on our energy projects, when our rivals do not pay such taxes, and on the other side of politics you have premiers like Campbell Newman dumping higher royalties on coal, you realise that our politicians live in slumber land.

They seem determined that the nation should have lower carbon export revenue, whether it is coal or gas but have not yet fathomed what that means to government spending on social services education, medicine etc.

Coal and gas revenue (plus iron ore) has enabled both the coalition and Labor governments to spend large sums on all the things that make a us feel good.

Just has the Middle East will feel the brunt of the lower energy prices that follow the US discoveries so will Australia.

Eventually the end of the boom will affect the Australian dollar. If it takes too long we will have just about hollowed out most of our employment creating industries. The politically correct people oppose helping industries being ravaged by this temporary boost in the dollar, but given the enormity of what is taking place in the world we will have to try and at take measures to avoid the worst effects of the so called Dutch disease (RBA readies for a double Dutch smack, October 2).

The real problem is that just as it took six months to understand that the mining investment boom was over, we will take even longer to cotton onto the wider implications.

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